New mortgage rules could affect what you qualify for by 20 points: OneStreet Mortgage

This yesterday from our friends at OneStreet Mortgage.

“Effective October 17, 2016, all insured homebuyers must qualify for mortgage insurance at an interest rate the greater of their contract mortgage rate or the Bank of Canada’s conventional five-year fixed posted rate. This requirement is already in place for high-ratio insured mortgages with variable interest rates or fixed interest rates with terms less than five years. What does this mean for the average household?”

More on the OneStreet Mortage blog, here.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Norm Fisher
Royal LePage Vidorra

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CMHC announces new rules making it easier to purchase homes with secondary rental suites

Finally! A rule change by CMHC that actually puts less resistance on the borrower. Effective September 28, borrowers aiming to purchase properties with legal, secondary suites, will have a bit of a boost qualifying for their purchase.

A release from CMHC said, “Many municipalities across the country now formally recognize secondary rental suites as a source of affordable housing. Rents in secondary rental suites are often lower than those for apartments in purpose-built rental buildings.”

These changes will allow homeowners to count more of the income from a property’s secondary unit when qualifying for a loan. Previously, 50% of a secondary unit’s rental income would be eligible to use for qualification. Canada’s largest mortgage insurer has now indicated that they will consider up to 100 percent of the gross rental income from (the subject property of a loan application) two-unit, owner-occupied properties.

CMHC has suggested this would target two unit owner-occupied homes and would likely include basement rental units, in-law apartments and garden suites known as laneway homes. They generally classify secondary units as “self-contained with separate kitchen, sleeping and bathroom facilities.”

The legality of the secondary suite is a key component. CMHC only recognizes units that are legal or conform to local municipal standards. The Crown Corporation says that it’s up to lenders to exercise judgment, when it comes to borrowers proving the units are legal.

Homeowners with less than a 20 per cent down payment and borrowing from a regulated financial institution must get government backed mortgage default insurance. Even financial institutions not regulated by Ottawa, like credit unions, must abide by CMHC rules to be covered by the government backing.

Questions? Call me at 306-341-3539. I’ll be happy to help.

Tawny Bley
OneSt Mortgage (Assoc #316137)

Home ownership gets slightly more expensive May 1, 2014 (for some)


riel_200As you may have already heard, home buyers without a 20% down payment, will soon be paying more to buy a house. As of May 1st, 2014 the standard CMHC mortgage insurance premiums will be increased by an average of 15%. This is the first rate hike to premiums since 1998.

With an average home price hovering around $300,000 in SK, the current insurance premium with 5% down is 2.75% or $7,837.50. Once the changes take effect this will become 3.15% or $8,977.50. A difference of $1140, or roughly $5 per month on a standard 25 year mortgage payment.

The two other private insurers (Genworth and Canada Guaranty) have also followed suit and will be charging the same premiums as of May 1st. A full list of all changes can be found here: http://www.cmhc.ca/en/hoficlincl/moloin/moloin_013.cfm

So what can we as home buyers do to combat this fee? I have two tips to help you ease the pain of these recent changes:

Make sure your financing has been submitted for approval prior to May 1st. As long as you make an offer and your bank/lender submits the file prior to May 1st, you can move in months later and the new premiums will not apply. I know this is a little unrealistic being that we are only days away from these recent changes but it is the most immediate solution.

Offset the expense with a better mortgage rate (you knew this was coming). Again, based on $300,000, a .10% difference in your mortgage rate, you will save roughly $1400 over the course of a standard 5 year term.

All in all, if you qualify to buy a home today, the changes should not impact your ability to purchase the same home after May 1st. Debt ratios will remain almost identical with the $5 per month increase to a mortgage payment so although these are higher costs, don’t expect them to change anything in the housing market.

Please free to send me an email, text, or call anytime. I am always happy to help home buyers with any questions they may have, strategize over future plans or save you money on your mortgage!

Riel Syrenne
TMG The Mortgage Group
306-260-9918
riel@mortgagegrp.com

CMHC announces premium increases effective May 1, 2014

CMHC announced changes to the insurance premiums paid by borrowers on high ratio loans and we wanted to share an update to keep you all informed.

Excerpted from the CMHC press release, any emphasis is ours:

CMHC to Increase Mortgage Insurance Premiums

“OTTAWA, February 28, 2014 — Following the annual review of its insurance products and capital requirements, CMHC will increase its mortgage loan insurance premiums for homeowner and 1 – 4 unit rental properties effective May 1, 2014.

The increase applies to mortgage loan insurance premiums for owner occupied, self-employed and 1-to-4 unit rental properties, including low-ratio refinance premiums. This does not apply to mortgages currently insured by CMHC.”

“For the average Canadian homebuyer requiring CMHC insured financing, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment. This is not expected to have a material impact on the housing market.

Effective May 1st, CMHC Purchase (owner occupied 1 – 4 unit) mortgage insurance premiums will increase by approximately 15%, on average, for all loan-to-value ranges.

Loan-to-Value Ratio Standard Premium (Current) Standard Premium (Effective May 1st, 2014)

  • Up to and including 65% 0.50% 0.60%
  • Up to and including 75% 0.65% 0.75%
  • Up to and including 80% 1.00% 1.25%
  • Up to and including 85% 1.75% 1.80%
  • Up to and including 90% 2.00% 2.40%
  • Up to and including 95% 2.75% 3.15%
  • 90.01% to 95% – Non-Traditional Down Payment 2.90% 3.35%

CMHC reviews its premiums on an annual basis and, going forward, plans to announce decisions on premiums in the first quarter of each year. The homeowner premium increase follows changes CMHC made to its portfolio insurance product earlier this year.”

See the complete new release here.

Please call us today for a complimentary pre-approval including a rate hold at today’s best rates, and a mortgage commitment using CMHC’s current premiums.

Tawny Bley and Tyler Hildebrand
Mortgage Associates
Sky Financial Corporation
306-683-9539

What's happening in today's residential mortgage markets?

Amortizations are falling, rate discounts are increasing and consumers have flocked to fixed rates. Those are a few of the trends found in the Canadian Association for Accredited Mortgage Broker’s (CAAMP)  Annual State of the Residential Mortgage Market report. The following highlights were compiled by Canadian Mortgage Trends. Where do you fit in!

  • 16% of homes purchased in 2013 had amortizations over 25 years
  • 8% of respondents believe the housing bubble will burst within the next five years
  • 82% of new mortgages for homes purchased in 2013 were fixed rate mortgages
  • 2% of buyers with less than 20% down chose a variable rate mortgage
  • 40% of new mortgages in 2013 were obtained from a mortgage broker.
  • 70% of households with mortgages have 25% or more equity
  • 57% of 2013 homebuyers were first-time buyers
  • 84% of mortgages on homes purchased in 2013 had an original amortization of 25 years or less
  • 16% of borrowers  increased the amount of their payments in the past year – the average monthly increase was  $400
  • 17% of borrowers  made a lump sum payment – the average amount was $14,000

OTHER HIGHLIGHTS

  • 43% of current mortgage holders  consulted a mortgage broker about getting a new mortgage
  • 68% of respondents agreed their mortgages are “good debt”

INTEREST RATES

  • 3.23% is the average mortgage interest rate for mortgages on homes purchased in 2013
  • 3.20% is the average mortgage interest rate for mortgages renewed in 2013, which averaged 0.82 percentage point lower than prior to their renewal

EQUITY TAKE-OUT

  • 11%  of homeowners took equity out of their home in the past year with $57,000 the average amount
  • $59 billion is the estimated amount of total equity take-out in the past year
    • $16.6 billion was used for debt consolidation and repayment
    • $15.1 billion was used for investments
    • $12.3 billion was used for home renovations

REAL ESTATE/MORTGAGE MARKET

  • 9.52 million: The number of homeowners in Canada
  • 4.28 million: The number of renters in Canada
  • 5.58 million: The number of homeowners with mortgages (who may also have a home equity line of credit (HELOC))
  • 3.94 million: The number of homeowners who are mortgage-free
  • 2.3 million: Number of total homeowners who have HELOCs

MORTGAGING ACTIVITY

  • 450,000 of households bought homes over the past year
  • 400,000 of buyers took on mortgages

MORTGAGE MARKET OUTLOOK

The Canadian Real Estate Association (CREA) has revised its outlook to take into account a more buoyant market than expected. National sales have improved more quickly than anticipated. CREA’s forecast for national sales activity has been rebalanced with a modest upward revision this year to reflect stronger than expected sales for the year-to-date. Sales are forecast to reach 449,900 units in 2013. In 2014, national activity is forecast to reach to 465,600 units, a rebound of 3.5 per cent, and in line with its 10-year-average. The forecast increase reflects a gradual strengthening of sales activity alongside further economic, job, and income growth combined with only slightly higher mortgage interest rates.

I’m always happy to answer your mortgage and finance related questions. Feel free to call me any time at 306-260-9918 or drop me an email at riel@mortgagegrp.com.

Riel Syrenne
The Mortgage Group